Is the Euro destined to collapse?

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Reforms that place excessive emphasis on austerity measures across Europe have not addressed adequately the fundamental causes of lack of growth and financial instability in the Euro zone, a leading economist claims ahead of a major debate on the future of the euro.

As a result, many economies in Europe are sliding back into recession, casting further doubt on the credibility of the current stance of fiscal policy and the ongoing reforms, says Panicos Demetriades, Professor of Financial Economics at the University of Leicester.

The fate of the euro will come under scrutiny in a live debate to be held in London on 7 March.

An expert panel of thought leaders will discuss with an audience whether the euro is becoming an ever greater threat to Europe’s common future, with currency union chaining together economies that are simply incompatible.

The event at the Lloyd’s Building is part of Leicester Exchanges, a forum for live and online debates spearheaded by the University of Leicester tackling topical issues with a view to shaping future thinking on a subject.

The panel includes Bill Cash MP who was the leader of the Maastricht Rebellion during the 1990s. He is currently a member of the European Scrutiny Committee and Chairman and founder of the European Foundation think tank.

He will be joined by Petros Fassoulas, Chairman, European Movement UK which, since its creation in 1948, has sought to build and maintain public support for the unity of Europe. The European Movement rallies all those who believe that European unity is vital where the people of Europe have interests in common such as increased trade to improve economic prosperity, an improved environment to tackle climate change, and action to combat global poverty. Mr Fassoulas’ previous roles include EU Affairs Adviser at the Financial Services Authority and EU affairs adviser at UK Parliament, EU Select Committee of the House of Lords.

Panicos Demetriades is also joining the debate. He is one of the UK’s leading academics in the field of economics and his research interests are in the area of finance and development. Panicos has held visiting positions at the IMF and the World Bank, has been a been a consultant to the OECD and the Economic and Social Research Council, and is Treasurer of the Money, Macro and Finance Research Group His blog, Give good economics a chance is a popular online resource for insight into topical popular economic issues.

Professor Demetriades said: “The situation in the Euro zone remains critical; political and economic developments this year will determine whether the Euro survives in its present shape and form. Since December the ECB, by providing unlimited liquidity to banks at low interest rates for three years, has been playing a major stabilizing role in financial markets, buying time for politicians to agree and implement much needed reforms to its architecture. Unfortunately, however, these reforms, by placing too much emphasis on austerity, have not addressed adequately the fundamental causes of lack of growth and financial instability in the Euro zone. As a result, many economies in Europe are sliding back into recession, casting further doubt on the credibility of the current stance of fiscal policy and the ongoing reforms. Bold measures, based on the principle of greater economic integration, are now urgently needed to restore confidence”.